By Catharine Hamm
September 29, 2013
In the Sept. 22 On the Spot column ("Change Can Cost You"), reader Randy Smith of Cathedral City, Calif., asked about airline change fees and wondered what I thought about why they are so — how can I put this gently? — inexplicably and atrociously exorbitant. These fees hit the leisure traveler where it hurts most because he, not his boss or his company, ends up paying them or losing the ticket. Surely, there must be another way to deal with this. Indeed, there is.
In the spring, legacy carriers raised the change fee to $200 for a domestic ticket, $300 for an international ticket. Granted, the airline industry is suffering the ravages of the economy and needs that money to balance its books, but unfortunately, carriers are doing it on the consumer's back to the tune of almost $2.6 billion in 2012.
So what is?
There are options. Take, for instance, my recent experience at my favorite shoe store. The shoes I wanted had to be ordered, and the salesman advised me that because they were not a color the shop usually carried, there would be a $25 fee if I returned them, about 20% of the purchase price. It was a bit of a gamble — I was pretty sure I would like them and I knew they would fit — so I said that was fine, and it was.
That's a bit like buying an airline ticket. I know I want it, and I don't foresee any problems. But if something does come up, Moneygrubbing Airline will charge me 100% or more (if the ticket was less than $200) , even though it probably can resell that seat to someone else. Too bad, chump.
That's just mean-spirited, said George Hoffer, an economics professor at the University of Richmond in Virginia, who often helps me understand the financial equations behind the travel industry. I didn't have any trouble understanding mean-spirited.
The fees "do not cover an 'explicit,' or out-of-pocket cost to the carrier, unlike food or baggage handling," he said in an email to me. "The explicit/out-of-pocket cost is minimal, and that should always be the minimal charge."
Here's one of Hoffer's suggestions:
"Have the fee charge be a function of the number of days/time to departure," he wrote. "The more time you give the carrier, the lower the fee, if any, other than a token one."
That's in line with a report released Monday by the National Consumers League, a Washington, D.C., consumer advocacy group whose study, "$tuff Happens: Airlines Benefit Handsomely From the Unexpected … and Consumers' Fears About It," suggests a "tiered cancellation/change fee pricing model based on the proximity of the travel date."
Say amen, someone, preferably someone who can do something about it.
But, you say, we leisure travelers can do something about it, can't we? Yes, we can. We can buy refundable tickets, although the NCL report says a refundable ticket costs on average 350% more than a nonrefundable one. You can fly Southwest, which doesn't charge a change fee, assuming you want to go where it goes. You can fly those airlines that have reasonable change fees; to find out which ones do, go to http://www.lat.ms/187dfS7. Again, not always practical.
And then there's travel insurance, which you might be tempted to buy to offset those change fees.
If this were a movie, this is where the scary music would start.
You may have noticed that at the end of the online booking process, you're often given a chance to buy travel insurance. On Orbitz, for instance, as you're lining up your ticket, up pops this message: "Highly Recommended: Select Trip Coverage." It gives the option of adding "trip protection" for $21. Among the top three reasons to invest in travel insurance: You can "get reimbursed up to 100% if you have to cancel or interrupt your trip for reasons like illness, injury, layoff and more."
There's a "learn more" link right above the choice that says, "No, I choose not to protect my purchase," which sort of strikes me like saying, "No, I choose not to protect my children so I will not fence in my yard."
In the case of a ticket, though, choosing not to protect your purchase might be the smart choice.
Let's say you get fired and decide you shouldn't take that trip. Layoffs are covered, right? The exclusions say you're not covered if you haven't worked continuously for that employer for three years and if it's your fault you got fired. It's unclear from the policy who gets to determine fault or how it's ascertained.
That's just one of the loopholes. Pre-existing medical conditions can exclude you. Or if you need to cancel because your child gets injured on the soccer field? Oh, oh. That's excluded if you or a family member is "participating in or training for any professional or amateur sporting competition."
Having anxiety yet? You should be. "Travel insurance is an opportunistic insurance," said John Breyault, vice president of public policy, telecommunications and fraud for the consumer association and the author of the study. Essentially, it means you're buying insurance when you're not expecting to.
Would you be better off taking that $21 and setting it on fire? We'll talk more about travel insurance in the next Spot.
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